The total annual family income in 2006 was estimated at P 2.99 trillion indicating an increase of 22.7 percent over the 2003 estimate of P2.44 trillion. The total family expenditure was approximately P2.56 trillion, an increase of 25.7 percent over the 2003 estimate of P2.04 trillion (Table 1).

In 2006, the average annual income of Filipino families was estimated at P172 thousand. Across income deciles, this average ranged from P32 thousand for the first income decile (or lowest income group) to P617 thousand for the tenth income decile (highest income group)(Table 2b). Income decile is the distribution of families into ten groups in terms of annual family income. The first decile has the lowest income and tenth decile has the highest income.

The 2006 average annual income (P172 thousand) is 16.2 percent higher than the 2003 estimated average of P148 thousand. Meanwhile, the average annual expenditure of families increased from P124 thousand in 2003 to P147 thousand in 2006, or by 18.5 percent over the three-year period. These numbers translate into average savings in 2006 of some P25 thousand per family; the 2003 estimate was P24 thousand per family. These savings came mainly from the tenth income decile with P156 thousand per family on the average in 2006 (Table 2a).

From 2003 to 2006, annual income in all deciles increased. The average annual income of the bottom 30 percent of families (or the lowest three income deciles combined) increased by around P8 thousand; that of the upper 70 percent of families, by some P31 thousand. For all families, the increase was P24 thousand (Table 2a).

Adjusting for the inflation between 2003 and 2006, total family income in 2006 (P2.99 trillion) would be valued at P2.17 trillion at 2000 prices. Likewise, the total family expenditure in 2006 (P2.56 trillion) would be valued at P1.86 trillion at 2000 prices. In real terms, the total income of families increased by 8.0 percent while the total expenditure increased by 10.6 percent between 2003 and 2006.

Also, the average family income decreased by 2.8 percent while average family expenditure decreased by 0.4 percent. Thus, the 2006 real average savings by families is equivalent to P18 thousand at 2000 prices, which is lower than the 2003 average savings of P24 thousand per family (Table 1).

The income distribution changed slightly from 2003 to 2006. The share to the total income of families belonging to the tenth decile exhibited a slight decrease, from 36.3 percent in 2003 to 35.9 percent in 2006. The gap in family income between the families belonging to the tenth decile and those in the first decile had narrowed slightly. In 2006, the total family income of the tenth decile was about 19 times that of the first decile, while it was 20 times that of the first decile in 2003 (Table 2a). The Gini coefficient was estimated at 0.4564 in 2006, slightly lower than the 2003 ratio of 0.4605 (Table 1). The Gini coefficient provides a measure of income inequality within a population. A Gini coefficient ranges from 0 to 1, with 0 indicating perfect income equality among families, and 1 indicating absolute income inequality.

The spending pattern of Filipino families particularly among those in the bottom 30 percent income group continued to slide towards less spending on food. In 2006, 59 percent of all expenditures by this group was on food, while it was 60 percent in 2003. This means that for every P100 spent by this group in 2006, P59 went to food, compared to P60 in 2003. Consequently, there was a decrease in the shares of other expenditure items like tobacco (2.0% to 1.7%), clothing, footwear and other wear (2.5% to 2.0%) and house maintenance and minor repair (0.5% to 0.2%) (Table 3). xxx

• The 2006 Family Income and Expenditure Survey (FIES) is a nationwide survey of households undertaken every three years by the National Statistics Office (NSO). It is the main source of data on family income and expenditure, which include among others, levels of consumption by item of expenditure as well as sources of income in cash and in kind. The results of FIES provide information on the levels of living and disparities in income of Filipino families, as well as their spending patterns.

• The 2006 FIES is a sample survey designed to provide income and expenditure data that are representative of the country and its 17 regions. It used four replicates of the 2003 Master Sample (MS) created for household surveys on the basis of the 2000 Census of Population and Housing. The 2003 MS has been designed to produce the sample size needed for large surveys, like the FIES. To facilitate subsampling, the 2003 MS has been designed to readily produce four replicate samples from the full set of sampled PSUs.

• In the 2003 MS, a stratified, three-stage sampling design was employed: the selection of Primary Sampling Units (PSUs) for the first stage, sample enumeration areas (EAs) for the second stage, and sampling units for the third stage. The domains are the regions which were stratified by province, highly urbanized city (HUC), independent component city (ICC), and other factors within the geographical strata. The overall sampling fractions vary across regions to generate adequate sample size for each region. Survey weights are used in order to produce valid estimates of the population parameter. Base weights are computed to compensate for the unequal selection probabilities in the sample design. These were adjusted to account for unit nonresponse and to conform to known population distributions (eg. projected population counts).

• The 2006 FIES enumeration was conducted twice - the first visit was done in July 2006 with the first semester January to June as the reference period; the second visit was made in January 2007 with the second semester of 2006, that is, July to December 2006 as reference period. The same set of questions is asked for both visits.

• The number of households/families for the 2006 FIES was estimated using the 2000 Census of Population and Housing (CPH)-based population projections and information from the 2000 CPH on the average household size by province.

• The estimates from the 2006 FIES include results of the first FIES visit for the NCR based on questionnaires recovered from fire. The fire that hit the NCR’s Statistics Office on October 3, 2006 damaged 58 percent of the total questionnaires for the FIES first visit. Questionnaires that were encoded and processed cover around 42 percent of these questionnaires. For the burned questionnaires, values were imputed using the ratio of the second visit value to the first visit value.